Carl Icahn may retain a huge stake in Lions Gate after all
Lions Gate Entertainment Corp. may not be rid of dissident shareholder Carl Icahn quite as soon as it had hoped.
The Santa Monica studio is putting on hold its plan to sell 22 million shares of stock on behalf of Icahn, according to a person who declined to discuss the matter publicly because the discussions are confidential.
Lions Gate’s plan was foiled by its anemic stock price, partly the result of the poor performance of the studio’s recent movies.
On Aug. 30, Icahn and Lions Gate agreed to end their litigation against each other in exchange for Icahn’s selling his approximately 44 million shares. The studio bought 11 million and investor Mark Rachesky, now the company’s largest shareholder, purchased another 11 million.
The remaining 22 million were supposed to be sold on the open market at a per-share price of $7.
While Lions Gate stock closed up at $7.08 on Tuesday, its shares have been trading below $7 for much of the last month. Adding to its woes, last week the studio disclosed that it expects to report a loss of $40 million to $50 million in the current quarter because of the weak box-office performances of its three most recent releases: “Conan the Barbarian,” “Warrior” and “Abduction.”
Under the agreement with Icahn, Lions Gate has until Oct. 18 to sell Icahn’s shares. If the company is unable to do that, the billionaire investor will be able to retain his 22 million shares, giving him an approximately 16% stake in the company and making him the second-largest shareholder, behind Rachesky.
“That’s a big blow for Lions Gate,” said analyst David Miller of Caris & Co.
Icahn has been a frequent critic of the studio’s management — led by Chief Executive Jon Feltheimer and Vice Chairman Michael Burns — and last year unsuccessfully attempted to take control of the company and oust them.
Last week Burns traveled to New York and other cities on a road show to try to generate investor interest in the stock.
A Lions Gate spokesman said Burns was unavailable for comment.
The delay in the stock sale was first reported Tuesday by Reuters.
